WHO ADOPTS BALANCED SCORECARDS? AN EMPIRICAL STUDY

Alicia A. Yancy
University of Houston – Downtown

ABSTRACT

Firms have many options for measuring and reporting organizational performance, including simple Key Performance Indicators (KPIs), the Performance Prism, and various business analytics tools. However, the most popular performance measurement system for the last 2 decades has been Kaplan and Norton’s Balanced Scorecard (BSC). This study proposes and tests a model to explain the choice of the Balanced Scorecard as a firm’s performance measurement system. Drawing from theory and existing literature, a model of contextual factors is developed to predict a firm’s likelihood to adopt BSC. It is posited that a firm’s intangible assets, strategy, recent financial performance, size, and amount of divisionalization are associated with its propensity to adopt BSC and empirical support for the model based on the sample data.
The results revealed that firms with more intangible assets, firms pursuing prospector strategies, firms with poor prior financial performance, large firms, and decentralized firms have significantly adopted the balance scorecard (BSC) as the preferred system of performance measurement.

Keywords: Balanced scorecard, performance indicators, firm’s performance